When disaster struck Europe, the Americas naturally couldn’t escape. As international trade flourished, the economic ties between nations had become increasingly tight. Once the crisis hit, every single part of the supply chain was affected, from downstream manufacturing and retail to wholesalers and upstream raw material suppliers. Then, beef and soybeans from Argentina became difficult to sell, Chilean copper and saltpeter languished, and cotton from the Confederacy rotted in the fields. But the one to suffer the most was undoubtedly the United States, which had gone the furthest down the path of industrialization. There was nothing they could do as the economic crisis brought about a wave of “dumping.” The interests of Britain and Austria were aligned on this point, as was the common will of all European nations. The divided Americans simply had no backbone to refuse. Not only was the market hit, but the most tragic thing was that to cope with the domestic crisis, British capital suddenly pulled its investments out of the United States at a critical time. Strikes, unemployment, and the stirring of populism spread like wildfire. The “Free Silver” movement of 1892, in particular, further intensified the crisis. The price of silver had been falling for a while, and the “Free Silver” policy undoubtedly put the U.S. dollar on a path of devaluation and inflation. It’s not that Americans were unaware of the consequences of the “Free Silver” policy, they were forced into it. Facing the competition from European industrial and commercial goods, American domestic businesses had almost no power to fight back. To protect domestic industry, the US government had to adopt a stimulus policy. The aftereffects, of course, were paid for by the common people, with the agricultural sector suffering the worst losses. However, America had already split once. The powerful agricultural states had mostly gone with the Confederacy, and the remaining states were dominated by capital, so no one really cared about these “small” problems. When inflation met the economic crisis, the situation became completely different. The decline in the purchasing power of ordinary people led directly to a further shrinking of the market, and the vicious cycle began. The withdrawal of British capital only deepened the crisis, leading to a bizarre situation. On one hand, there was severe inflation, while on the other, there was a shortage of currency in the market. With its gold reserves severely depleted, the United States plunged into both an economic and a currency crisis. To combat the crisis and escape the Great Depression, Democratic President Cleveland took a decisive measure: he issued government bonds to purchase gold. Bankers, of course, wouldn’t pass up this opportunity to make a killing. On one hand, they supplied gold for these high-interest bonds, while on the other, they used paper money to exchange for gold from the reserves. With this simple transaction, the gold reserves barely increased, but the interest spread had already allowed the bankers to rake in a fortune. Looking at the intelligence in his hand, Franz grew highly suspicious. Was Cleveland bribed by the bankers? How could anyone come up with such an idiotic monetary policy? His suspicion didn’t stop him from getting a share of the profits. His only regret was that the United States wasn’t a fat enough target at the time. The pie was too small, and with so many people wanting a slice, an outsider like him got even less. The six hundred eighty thousand dollar interest spread was the result of a single month’s operation for his American branch. While it was a huge sum for an ordinary person, for Franz, it was barely better than nothing. He wasn’t concerned about what happened next. Any idiotic policy is unsustainable, and a policy that literally gives away money is no exception. If Cleveland continued to play this game, the US government would likely be crushed by debt before his term even ended. No matter how absurd the gold bond policy was, it didn’t change the fact that Cleveland was a “good president.” The very fact that he repealed the “McKinley Tariff Act,” known as the “mother of trusts,” made him a “good president.” … As a saying in the financial world goes, if everyone is tied to the same risk, then it’s not really a risk. The same logic applies here: if the economies of all nations are declining together, then the global economic situation can be considered a flatline, at least in terms of relative national power. His strategic goal was achieved, but Franz couldn’t be happy. After all, he still had to find a way to navigate the economic crisis. All nations were dragged into the same mess, leaving no opportunity for a competitor to rise. Strategically, this was a success, but it also made the task of economic recovery more difficult. Looking at the world map, Franz said with a sigh, “The Foreign Ministry should prepare to mediate the Japanese-Spanish War. The Spanish are on the verge of collapsing, and the Japanese are not doing much better. If the war continues, it will likely become a war of attrition between us and the British. At the current intensity of the Philippine campaign, a clear victor might not emerge for another three to five years. There’s no point in continuing this game with no certain outcome. We shouldn’t waste any more money. Now is the best time to stop. I doubt the British want to keep throwing their money down the drain either.” In a war between two broke nations, the ones who ultimately suffer are the patrons. While it hasn’t reached the point where “the one who owes money is the master,” they were still powerless against a debtor who has no money to pay. Spain is in a slightly better position since they at least have a few wealthy colonies that are worth something. Japan, however, is truly dirt poor. If they manage to seize the Philippine Islands, there will eventually be a way for them to pay back their debts. But if they don’t, the British investment will be a complete loss. Soybeans have an oil yield of 20%, rapeseed 36%, and sesame 45%, but can you squeeze oil from chaff? If Franz were to put himself in the British government’s shoes, he would have to seriously consider whether it’s worth it to continue investing in the Japanese. Using capital to bleed the enemy dry might work against the Russians, but unfortunately, their opponent this time was the Holy Roman Empire. Without tens of billions of pounds, you wouldn’t even make a dent. Even if the British had more capital, the Holy Roman Empire had greater stamina! A war of attrition didn’t just test capital, endurance was just as important. Wessenberg, the Foreign Minister, frowned and said, “Your Majesty, the key to mediating the Japanese-Spanish War lies in the ownership of the Philippine Islands. The war has gone on so long, neither Japan nor Spain will give in easily. If we try to smooth things over and let them jointly administer the islands, we might end the war for now, but they’ll just fight again in a few years. We don’t have the time to get tangled up in this. From the empire’s perspective, the best solution is to get the Japanese to abandon their claim. To make the Japanese government concede, our power combined with Spain’s is definitely not enough. Even if we bring in the entire European Alliance, it might not be enough, unless the British also support us. But…” Franz interrupted him, “There are no ‘buts’! The main players in the Philippine War are Japan and Spain; don’t you think we’ve already gotten too involved? At this point, it’s time for the Spanish to make their own effort. No matter how pathetic they are, as a European nation, they surely won’t lose to the Japanese in a struggle for the European narrative, right? We’ll let them use their own influence to build support for themselves in Europe and, while they’re at it, portray the Japanese as barbaric. That should be enough. It’s a time of economic crisis. The British Parliament isn’t idle, and with so many eyes watching, where is the British government going to get the funding to keep supporting the Japanese? Ending the Japanese-Spanish War means getting rid of this ‘money black hole,’ which will give our government a chance to catch its breath financially. This will be very beneficial for our next phase of economic development.” War costs money. The Philippine campaign had reached a point where both Japan and Spain needed “massive amounts of money” and “massive amounts of supplies.” Merely offering verbal support was no longer enough. Once public opinion was riled up, if the British government were to send money to aid Japan, the British people, whose stomachs were already rumbling, would absolutely make them face serious consequences. In a battle to find leverage against the government, the opposition party was the Spanish government’s natural ally. If a problem was exposed, they would certainly raise a fuss in Parliament. Even if the British government were to hint for financial groups to lend money to the Japanese, who would lend to a government that, with a single look, had no ability to repay its debts unless someone guaranteed the loans? A penniless Japanese government would have no choice but to compromise. If they didn’t seize this opportunity to negotiate while they still had some leverage, they would eventually have no bargaining chips at all. The only pity was that with the Japanese-Spanish War ending this way, the Holy Roman Empire couldn’t maximize its profits. From a pure return-on-investment standpoint, the Austrian government had just completed a bad investment. But to emerge from the economic crisis sooner, Franz couldn’t be bothered with whether it was a profitable or a losing deal. The expenditure of ten million guilders per month, if used for economic recovery, could create tens of thousands of jobs. After all, the Austrian government was truly broke. Not only did the domestic economy need to recover, but they also had to use money to provide relief for their “underlings.” Bankruptcy was one thing, but governments still had to exist. The debt problems could be put on hold for now, but the social order of these nations could not be allowed to collapse. Times had changed. As the leader of the European continent, the Holy Roman Empire had become a maintainer of order. The “wonderful” era of watching the chaos from the sidelines was gone forever. … Chancellor Karl began, “Your Majesty, in light of the current situation, the cabinet plans to increase infrastructure spending and to fast-track the Asia-Africa-Europe Loop Railway Line. We will use this major infrastructure project to drive our domestic economic recovery. Given the enormous investment required, the cabinet plans to break the project into multiple sub-projects. The sections with a higher return on investment will be opened up for private financing and construction to lower the government’s initial costs. The remaining sections, those with significant construction challenges and no clear return on investment, will be funded and built by the government itself. The primary funding will come from bank loans and the issuance of government bonds. The current situation is highly favorable to us. Over a dozen European nations, including Russia, Spain, Belgium, Switzerland, Sardinia, and Lucca, have recently borrowed large sums of money from us. The Guilder settlement system is now basically established across the European continent, and by sheer luck, it coincides with an economic crisis when the British are too preoccupied to help themselves. If we can emerge from this economic crisis ahead of them, the guilder will have a decisive advantage in the battle for currency hegemony. Once Europe is stable, expanding into the rest of the world will be easy. It’s simply a matter of who can buy more. No matter what the various governments think, capitalists will welcome the guilder with open arms.” The “losing strategic railway” was destined to be paid for by the government. There was no other way as a scam like that could only be used once. Decades earlier, during the great domestic railway construction boom, the capitalists had already been conned once, and now they were all much wiser. No matter how well you told the story, if there was no clear return on investment, no one would listen. The name “Asia-Africa-Europe Loop Railway Line” sounded imposing, but in reality, it wasn’t all it was cracked up to be. It was simply about connecting the existing railways and filling in the missing gaps. To hope for this line to be “profitable” would require the Holy Roman Empire’s population to quadruple or quintuple just to see a glimmer of hope. And even then, this would only be “nominally profitable,” meaning that the operating revenue would barely exceed the operating costs. To recoup the initial investment and achieve a respectable return, the population would likely need to increase seven or eight-fold. Whether the project would be realized in the future was unknown, but Franz knew he would never see it in his lifetime. Losing money was acceptable, as long as the loss had value. Theoretically, as long as the Holy Roman Empire’s navy maintained its dominance over the Mediterranean, this seemingly strategic railway would have no real purpose. After all, sea transport was far cheaper. By the time a merchant ship could make a few round trips, a train on the railway would barely have completed one long journey. Based on the current international situation, the Holy Roman Empire’s naval supremacy in the Mediterranean was completely established, and not even the British could shake it. If the British were ever brave enough to send the main force of the Royal Navy into the Mediterranean, Franz would laugh in his sleep. The so-called bathtub was no joke, and nowhere was it written that naval battles could only be fought by navies. As the world’s leading air power, Franz could confidently declare that coastal areas were off-limits to all foreign warships. Whether taking off from the Asia-Africa-Europe continental ring or the Italian peninsula, the Holy Roman Empire’s air force could make them face serious consequences. A low hit rate was no problem. If the sheer numbers were high enough, there would always be a result. If all else failed, the Japanese “kamikaze” units would also be a useful reference. Besides the planes in the sky, there were also submarines beneath the waves. The Holy Roman Empire’s submarine technology was once mediocre, but that changed after the Anti-French War. Having inherited French submarine technology, the Imperial navy now had its own submarine fleet. The only pity was that their technology hadn’t advanced far enough yet, limiting them to coastal operations. With so many advantages, the Austrian government’s need for the “Asia-Africa-Europe Loop Railway Line” was naturally not a high priority. Had it not been for the economic crisis, the railway probably wouldn’t have even been approved. There were no “what-ifs” in reality. Since the opportunity had presented itself, the loop railway was destined to be built. Was it a waste? Perhaps. But compared to the positive impact the project would have, that was hardly worth mentioning. After all, recovering the economy was the Austrian government’s most pressing concern. The sooner they could emerge from the economic crisis, the more of an advantage the guilder would gain in the struggle for currency hegemony.
*** https://postimg.cc/gallery/PwXsBkC (Maps of the current territories of the countries in this novel made by ScH)
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